PNG plan to cost $1.1 billion over 4 years

The Rudd government has revealed its refugee resettlement deal with Papua New Guinea will top $1 billion.

And that's not including an extra $420 million in extra development aid for Australia's northern neighbour.

Prime Minister Kevin Rudd announced the hardline policy last month, which will see all asylum seekers who arrive by boat transferred to PNG for processing, with no chance they will be resettled in Australia.

The cost of the boats plan was finally outlined on Friday in the government's May budget update which said the cost would be $1.1 billion over four years, with a a $175 million price tag in 2013-14.

Finance Minister Penny Wong told reporters the arrangement would be partially funded in a $423 million four-year reduction in the costs of operating the onshore detention centre network.

"Funding of $236 million over four years is being offset from a reduction in the aid budget, and $23 million from the contingency reserve," Senator Wong told reporters in Canberra.

"The remaining costs of this package have been offset from whole of government savings."